Constellation Brands (STZ) to Acquire Charles Smith Wines in ~$120M Deal

October 17, 2016 7:59 AM EDT

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Constellation Brands (NYSE: STZ) announced an agreement with Charles Smith Wines LLC to acquire the Charles Smith Wines collection of five super and ultra premium wines for approximately $120 million. The transaction, expected to close in October, includes Kung Fu Girl Riesling, Velvet Devil Merlot, Boom Boom! Syrah, Eve Chardonnay and Chateau Smith Cabernet Sauvignon. With this acquisition, Constellation Brands will solidify its position as the second leading supplier of Washington State wines, gaining a collection of high quality wines that have strong consumer affinity and demand, and have shown double-digit volume growth over the last three years.

Charles Smith started the core collection of Charles Smith Wines in 2006 with the goal to create high quality, varietal specific wines true to the place of origin at a price point for everyone to enjoy. These Washington State wines are full of flavor, balanced and approachable, and have consistently garnered 90+ scores by leading industry critics. The largest wine, Kung Fu Girl, is the #2 super premium Riesling growing retail sales at 45 percent over the last year. The wine has scored 90+ points for the past seven vintages and has been twice named a Wine Spectator Top 100 wine. Boom Boom! Syrah is the #1 ultra premium Syrah with IRI dollar sales growth of more than 50 percent while Velvet Devil Merlot is the #2 super premium Washington State Merlot and is outpacing sales growth of the leading brand in this category.*

Smith will assist Constellation Brands under a consulting agreement as winemaker to maintain the high quality and consistency of the wines and will work with Constellation Brands to help drive further innovation across its wine portfolio. Wine Enthusiast named Smith, a former rock band manager, Winemaker of the Year in 2014 and Food & Wine bestowed the same honor in 2009.

"Charles Smith is a visionary in the wine business and we are excited to welcome him to Constellation Brands and bring these wines to a larger audience," said Bill Newlands, president, wine and spirits division, Constellation Brands. "With the addition of this collection, we strengthen our core wine portfolio and augment our innovation capabilities to stay ahead of consumer trends. I am looking forward to working with Charles and tapping into his creative genius to fuel our wine innovation."

"I created Charles Smith Wines so that everyone could experience a great tasting, quality wine, at an affordable price," said founder Charles Smith. "The quality of grapes in Washington State is incredible, and I have been able to put the best wines I can in a bottle for people to enjoy. Constellation Brands has a proven track record of acquiring and working with brands and companies to help them reach the next level. With Constellation Brands, we now have the opportunity to share these wines with the world."

The wines are sourced from prime vineyards across Columbia Valley and are produced in several custom crush facilities in Washington. Sustainable practices are utilized in both the vineyards and in the winemaking process for all of these wines. The following wines are not included in this deal and will continue to be nurtured and developed by Charles Smith's company: K Vintners, Wines of Substance, ViNO, Casa Smith, SIXTO, B. Leighton and Charles & Charles.

* IRI, Total US Multi-Outlet and Convenience, 52 weeks ending 9/4/16

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